Another corporate giant ditches performance reviews

by Ben Abbott25 Aug 2015
HR thought leader General Electric is joining the growing line of companies looking to make the traditional performance review a thing of the past.
 
Following names like Accenture, Adobe and Gap, GE is trading its annual performance reviews for more frequent conversations and feedback.
 
The Washington Post reports this will include an app to help managers and teammates share feedback and the phasing out of performance rankings.
 
Statistics from the Institute of Corporate Productivity show that about 10% of Fortune 500 companies have already canned an annual ratings system.
 
However, GE’s move is being seen as a bellwether for corporate America, given that it was one of the most avid adopters of annual ratings in the past.
 
The company has in the past assigned rankings annually to employees based on performance, and aggressively cut poor performers from its flock.
 
Corporate Executive Board HR practice leader Brian Kropp told The Washington Post GE’s move would reverberate more than Deloitte or Accenture.
 
“If a company like GE were to make the transition, that would really be powerful,” he said.
 
In fact, it could dramatically escalate the number of companies looking to end annual ratings. according to Corporate Productivity’s Cliff Stevenson.
 
"The snowball has started rolling. I would not be surprised to see next year when we do the large survey again that it may jump into the twenties,” he said.
 
Technology is being given as one reason for the trend, as younger workers demand more instantaneous feedback on their ongoing performance.
 
The pace of change means annual goals may no longer be relevant by the next quarter, with companies now paying more regular bonuses.
 
GE HR executive Athena Kaviris told The Washington Post the company was ensuring that any feedback given wasn’t ‘old news’ by that time.
 
Also, companies have realized performance reviews are sapping managerial time and costing money, as managers are now responsible for more direct reports.
 
Embracing new performance technology and analytics is expected to enhance the amount of information available to HR, create more targeted programs for developing staff, and eliminate elements of managerial review bias.

COMMENTS

  • by Wayne Gobert 25/08/2015 11:26:06 AM

    Great to see so many white collar American organisations "thought leading". I absolutely agree with the view that an annual review is an absolute waste of time - if that is all that takes place. However I'm not so sure how the removal of a formal (auditable) process would go in the highly regulated Australian FWC context. Does the answer lie somewhere in the middle - a dynamic review process that can be audited?

    Those of us who work in blue collar unionised environments face some different challenges.

  • by Dr Arthur Shacklock 25/08/2015 2:25:59 PM

    I would be the first to agree that rating scales are often badly designed and thus a flawed mechanism in many cases. Often they do not deliver fair or reasonable outcomes. You should only rate individual people against some preconceived numbers or grades if there is some clear reason for doing so. In my experience there rarely is such a reason. We have known this for donkey's years, so this is hardly some new revelation that has suddenly been "discovered" ! However, the comment about trading this "for more frequent conversations and feedback" indicates to me that GE and others like them have no idea what performance management (appraisal, review) is really about. It was never supposed to be just an annual whack in the head or a pat on the back. Done properly it was always supposed to be about very regular conversations (at least monthly) to chat about how things are going on both sides of the ledger (upward and downward, even 360 degrees these days). Plus every day provides opportunities for constructive feedback anyway and so it should do. Good managers know this and so they do it and they have been doing it as long as I have been working in organisations (since 1959 !). Of course regrettably not all managers are good managers ! The "annual review" is really just the formal outcome and should deliver no surprises to anyone. It is, and has always been, the least important part of the process. Performance feedback is an ongoing and never-ending process for every one of us. You should not chuck out with the baby with the bathwater just because you don't know how to do it properly !
    Dr Arthur Shacklock
    (previously HRM Director for many years and more lately Associate Professor of Management)

  • by Dr Arthur Shacklock 25/08/2015 2:26:37 PM

    I would be the first to agree that rating scales are often badly designed and thus a flawed mechanism in many cases. Often they do not deliver fair or reasonable outcomes. You should only rate individual people against some preconceived numbers or grades if there is some clear reason for doing so. In my experience there rarely is such a reason. We have known this for donkey's years, so this is hardly some new revelation that has suddenly been "discovered" ! However, the comment about trading this "for more frequent conversations and feedback" indicates to me that GE and others like them have no idea what performance management (appraisal, review) is really about. It was never supposed to be just an annual whack in the head or a pat on the back. Done properly it was always supposed to be about very regular conversations (at least monthly) to chat about how things are going on both sides of the ledger (upward and downward, even 360 degrees these days). Plus every day provides opportunities for constructive feedback anyway and so it should do. Good managers know this and so they do it and they have been doing it as long as I have been working in organisations (since 1959 !). Of course regrettably not all managers are good managers ! The "annual review" is really just the formal outcome and should deliver no surprises to anyone. It is, and has always been, the least important part of the process. Performance feedback is an ongoing and never-ending process for every one of us. You should not chuck out with the baby with the bathwater just because you don't know how to do it properly !
    Dr Arthur Shacklock
    (previously HRM Director for many years and more lately Associate Professor of Management)

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